1. Field of Technology
The present invention relates to computerized workflow management and operational support for persons engaged in complex business or other processes. It has particular utility in supporting operations by financial organizations serving as trustees for securitizations, i.e., financial instruments such as Mortgage-Backed Securities (MBS), and other Asset-Backed Securities (ABS) or other financing arrangements involving debt instruments for which periodic valuation and distribution computations, disbursements and reporting must be set up and executed.
Securitization is commonly defined as a pooling of assets and issuance of securities to finance the carrying of the pooled assets. This process allows understanding of the behavior of a class of assets as a whole to be employed in creating a financial structure to finance such assets without the need to be concerned about the behavior of the specific asset within the class. (See Kravitt, Securitization, The Financier, Vol. 4, No. 5, December 1997.) The actual securitization process involves issuance of bonds which are backed, not by capital assets of the issuer, but rather by the cash flow from the pooled assets. These may be residential or commercial mortgages, credit card receivables, equipment leasing or even student loans, etc.
For a securitization to be an attractive investment vehicle, it must be carefully structured, for example, to take into account factors such early payoff of loans by mortgage holders. This often results in a very complex financial instrument, and correspondingly complex processing is required to manage the transaction.
Each of the participants in a securitization transaction serves a different role. For example, in the case of a residential MBS, the participants might include the originating mortgage lender, the issuer of the MBS (which could be the lender or a third party which aggregates mortgages from several lenders, the underwriter which provides the initial financing for the issue, the public investors and the trustee. The latter is usually a financial institution which is responsible for receiving payments collected by the servicer at the collateral (i.e., loan) level, for computing and distributing payments to the investors and for computing the taxes due on such distributions, for maintaining records of ownership and transfer of the securities and for producing and disseminating reports to investors and other interested members of the public.
Disbursements (commonly called “waterfall” payments) are usually made on a monthly basis, so the trustee must perform monthly waterfall calculations based on funds collected, and must generate monthly reports for the investors. Monthly, quarterly and annually tax computations must also be performed and reported to the investors. The trustee might be handling hundreds of securitizations, each of which may involve a different deal structure and different computations. It will be appreciated that fulfillment of the trustee's responsibilities may require the effort of many individuals to perform the many complex calculations and other tasks.
2. Prior Art
Task management and scheduling, and repetitive, complex computations obviously lend themselves well to computerization, but this has both positive and negative implications. Among the obvious benefits of computerization are improved speed and accuracy of computation. Indeed, it is difficult to imagine the trustee's role in securitization transactions without the availability of powerful computers and software. Similarly, computerization has expanded reporting capabilities, both in terms of data presentation and ease of delivery of information to a large number of users.
On the less positive side, computerization does not always take place in an environment of comprehensive planning and systems engineering, and securitization management software is not an off-the-shelf item. To accomplish the many processing, reporting, supervisory and quality assurance activities required of the trustee, it has proven easier to do the work using pre-existing functional sub-systems designed to perform the same or similar functions in other applications. Inevitably, though, when this is done, integration is virtually non-existent due to interoperability problems, and remedying such problems completely is usually not possible.
Another problem is that the transactions themselves often have longer lifetimes than the software on which the processing and reporting tasks were originally implemented. Software used for transactions created, for example, in the early 1990's may be quite different from what is currently used, yet the trustee must efficiently and accurately handle old as well as new transactions. Having to work with a collection of software platforms, some of which might be obsolete, and at the very least, do not interface well with each other, has also been a source of inefficiency and reduced functionality.
An additional problem in the prior art has been difficulty in implementing changes in existing data structures to accommodate evolutionary changes in the underlying financial structures. Database management software and database designs themselves can be quite resistant to these kind of changes. To add the capability for handling even a single piece of additional data has sometimes proven to be a major undertaking.
Up to now, there has not been available an integrated system which permits convenient and reliable performance of all of the tasks required of the trustee.